2G licence cancellation: Customers won't be affected much

NEW DELHI: Even though the Supreme Court today ordered cancellation of 122 telecom licences, customers will not be affected much as firms have been given four months to cease operations, allowing ample time for an arrangement so users can shift to another service provider.

Mobile number portability (MNP), which is in full force across the country, will help customers migrate without much trouble to an operator unaffected by the order.

"Basically, the time period of four months is the time for government to decide to come up with a enhanced market mechanism. After four months, as the licences of the firms are cancelled, their customers will obviously have the choice of opting for another player through MNP," Rajan Mathews, director general, Cellular Operators Association Of India (COAI), said.

The Supreme Court's decision to revoke 122 telecoms licences will likely impact less than 5 per cent of the country's mobile subscribers, the chief of the sector regulator told ET Now.

The affected subscribers can be transferred to other mobile operators, JS Sarma, chairman of the Telecom Regulatory Authority of India ( TRAI), told after the court ruling.

Sarma said, "We will have to apply our minds on fixing reserve price and will have a consultation paper shortly."

Sarma said that prospects of FDI will be even brighter now and since licences are cancelled, additional spectrum would be available for auction.

Ramdeo Agarwal of Motilal Oswal said that there is going to be dramatic shifts in competitive landscape of telecom in India.

"All remaining players will benefit, because tariff table will be more visible, govt will benefit from higher revenue," said Raamdeo.

Martin Pieters of Vodafone said, "We had all our licences before 2008. All the new players together have something like 3% market share."

Norway's Telenor said it has been "unfairly treated" and "was shocked" after Supreme Court's verdict to scrap telecom licences.

"We will study the order in detail and exercise all options available to ensure that Uninor continues to operate in India," Uninor, a joint venture between Telenor and India's Unitech , said in a statement. Uninor has about 36 million subscribers in India.

Reliance Communications said that licences to the company were issued in 2001 or prior to that and will not be affected by the Supreme Court judgement pronounced squashing all 122 licences alloted in January 2008.

"RCom's licences are not affected by the Supreme Court judgement pronounced today," the telecom service provider said in a statement to the BSE.

"RCom's licences were all issued in 2001 or prior," the company added.

India had 893.84 million mobile connections as of December end.

The operators whose licences are to be cancelled include some circles of Idea Cellular, Tata Teleservices, Uninor, Loop Telecom, Videocon and S Tel.

But the order does not affect companies that were granted licences before 2008; 3G services for which licences were auctioned will also not be interrupted.

The apex court, while cancelling the licences said the whole allocation process was done in an arbitrary manner. It slapped a cost of Rs.5 crore each on Unitech, Swan Telecom and Tata Teleservices and said half of that will go to the court's legal aid services and the remaining to defence services.